Rousseff declares war on corruption in midst of Petrobras scandal

BRASILIA (Reuters) - Brazilian President Dilma Rousseff launched an anti-corruption offensive on Wednesday to counter rising discontent over a kickback scandal engulfing state-run oil company Petrobras that has implicated her allies and undermined her popularity.

Her anti-corruption proposals, contained in bills submitted to Congress, include the criminalization of slush funds - known in Portuguese as "Caixa 2" - that are widely used by Brazil's political parties to finance their campaigns.

Other steps would hasten the seizure of assets from people convicted of corruption and from government officials who accumulate wealth out of proportion with their income.

As part of the anti-corruption drive, Rousseff also signed a decree implementing an anti-bribery law passed more than a year ago that stiffens fines for companies but has not been applied for a lack of finalized rules.

Rousseff said she would not brush the latest corruption scandal under the carpet and sought to divert criticism.

"I'm sure all Brazilians of good faith, even those who did not vote for me, know that corruption in Brazil was not invented recently," she said in a speech.

Many Brazilians, however, hold her responsible. On Sunday, about 1 million people took to the streets of Brazil's largest cities in anti-government protests triggered by the Petrobras scandal and discontent over economic stagnation.

Some demonstrators called for her impeachment.

Rousseff was chairwoman of Petrobras during the years when most of the corruption took place. She has denied knowing about a multibillion-dollar scheme in which kickbacks on overpriced contracts with some of Brazil's top engineering and construction firms were paid to politicians and Petrobras executives.

Opinion polls show most Brazilians believe she knew.

Less than three months into her second term, Rousseff's popularity has sunk to the lowest for a Brazilian leader since 1992, shortly before President Fernando Collor was impeached for corruption, according to a new poll published on Wednesday. {ID:nL2N0WK0E3]

The year-old investigation has so far led to the indictment of 103 people on racketeering, bribery and money laundering charges, including three former Petrobras senior managers and executives from six leading builders. Forty-seven politicians, mostly from Rousseff's coalition, are under investigation too.

Opposition leaders have said impeachment is unlikely since Rousseff has not been personally accused of wrongdoing in the Petrobras scandal.

Still, the investigation came closer to the president on Monday when prosecutors charged the treasurer of her Workers' Party with corruption for soliciting donations from executives accused of funneling money from the oil company.